Finance

China has room to act on fiscal policy amid uncertainties, finance minister says

Published

3 months ago

March 6, 2025

Business Finance News

China’s Minister of Finance Lan Fo’an speaks during a press conference in Beijing on Nov. 8, 2024.

Adek Berry | Afp | Getty Images

BEIJING — China has more room to act on fiscal policy amid domestic and external uncertainties, Finance Minister Lan Fo’an told reporters on Thursday.

He was responding to a question during China’s “Two Sessions” annual parliamentary meeting about the country’s plans for proactive fiscal policy this year.

China on Wednesday announced it was raising its on-budget deficit to 4% of the country’s gross domestic product — the highest since at least 2010.

The government also plans to issue 1.3 trillion yuan ($178.9 billion) in ultra-long-term special treasury bonds in 2025, marking a 300 billion yuan hike from last year. The increased amount is primarily set to support the consumer trade-in program.

China said it aims to issue 4.4 trillion yuan of local government special-purpose bonds this year — or a 500 billion yuan increase from last year — to help ease the financial strains of local authorities.

The country on Wednesday also said it would target a gross domestic product increase of around 5% this year, while lowering its inflation target to 2% — the lowest in around 20 years.

“China has delivered a pro-growth message here at the [National People’s Congress], in line with expectations,” said Aaron Costello, head of Asia at Cambridge Associates. The NPC is part of the “Two Sessions” meeting.

Costello noted that, beyond specific stimulus programs, the bigger issue facing China has been low business and consumer sentiment. He pointed to encouraging signals such as Chinese President Xi Jinping’s meeting with many tech entrepreneurs last month to encourage private business growth.

This breaking news story is being updated.

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

2 days ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”